Firms hit the ‘pause button’ over Brexit
Scottish companies have hit the “pause button” as Brexit uncertainty and fears of recession grow, business leaders have warned.
The Scottish Chambers of Commerce quarterly survey said investment has nose-dived as costs for firms has soared.
Scotland’s Brexit SECRETARY Mike Russell even called for extra cash to be pumped into the banking system to protect small firms from the worst effect of a “no-deal” scenario.
Scotland’s business leaders have issued a stark warning that firms have hit “the pause button” as Brexit uncertainty grows with a Scottish Government saying that a no deal departure could plunge the country into a “deep recession.”
Investment has nosedived as costs soar for Scots businesses, while concerns over future staffing have intensified as a new hardline immigration regime beckons after EU departure, according to the latest Scottish Chambers of Commerce (SCC) quarterly survey.
Scotland’s Brexit Secretary Mike Russell even called for extra cash to be pumped into the banking system to protect small firms from the worst effect of a no-deal scenario.
A no-deal Brexit looks increasingly likely, with Prime Minister Theresa May struggling to salvage her muchmaligned Withdrawal Deal in the aftermath of its Commons rejection.
And Scotland’s economy is already beginning to suffer, according to the latest SCC Quarterly Economic Indicator survey for the last three months of 2018.
“Many companies have pressed the ‘pause button’ as political uncertainty and increasing cost pressures take their toll on business investment and confidence,” said Neil Amner, chair of the SCC Economic Advisory Group.
“It is clear from the survey results that we are seeing future expectations dipping. Recruitment difficulties remain a persistent challenge and in any investment slowdown, businesses need practical and measured policy decisions that will enable economic growth.
“The survey results show the recruitment challenge is particularly pronounced in manufacturing and tourism. It is a priority for business that the UK government ensures immigration rules make it straightforward for companies to access skills at all levels, without prohibitive costs and additional bureaucracy.”
Costs are already rising for firms as they stockpile goods and face a rise in the price of raw materials to prepare for the impact of EU departure which is now a major “distraction” from their core activities.
The manufacturing, construction, retail and tourism sectors have all posted a gloomy outlook and there is a warning against political leaders adding to the “burden” facing firms after the suite of new taxes unveiled in last week’s Scottish budget.
It came as Mr Russell told MSPS at Holyrood yesterday that the Scottish Government has been “steadily intensifying” its preparations for a No deal in the early months of the year.
And he warned: “A No-deal
NEIL AMNER
Brexit has the potential to generate a significant economic shock which could tip the Scottish economy into recession - potentially into a deep recession.
“It would also have a severe impact on the labour market resulting in potential job losses, business relocations and closures, underemployment and a reduction in recruitment.”
He even called for extra cash reserves be to pumped into the banking system, with small business likely to be worst hit.
“We would support measures to ensure that there is increased liquidity in the banking system should it be required,” Mr Russell added.
A special Scottish Government Resilience Committee, headed up by Deputy First Minister John Swinney has been established and councils chiefs, and Police Scotland involved.
Fears of freight delays a Dover and through the channel tunnel could hit goods coming to Scotland, with rural areas worst hit.
He added: “Transport Scotland is also working with transport providers and ports and airports in Scotland to assess their existing capacity and identify how they could help mitigate disruption and ensure that Scotland’s exporters can continue to get their goods to market.”
The absence of a trade agreement between the UK and the EU would result in World Trade Organisation (WTO) tariffs for imports and exports is also expected to see significant price increases, MSPS heard, particularly for food and drink. “The Governor of the Bank of England has identified potential rises of between 5-10%,” Mr Russell added.
Professor Graeme Roy, Director at the University of Strathclyde’s Fraser of Allander Institute, said the current Brexit turmoil is increasingly
“It is clear from the survey results that we are seeing future expectations dipping”
Unprepared Brexiteers deserve a ‘special place in hell,’ says Tusk
casting a shadow over business activity in Scotland.
“Whilst many businesses remain relatively resilient in terms of their day-to-day activities, levels of optimism have slipped across the board,” he said.
“Unsurprisingly, manufacturers have become more pessimistic in their outlook as the prospects of a ‘no deal’ Brexit have risen. Indeed, confidence in the sector is at its lowest level since 2012.
The festive season did not provide Scottish retailers with much of a boost with optimism falling and cost pressures increasing.
“Across the economy, investment intentions remain subdued, with many businesses appearing to be in ‘wait and see’ mode.”
Theresa May arrives in Brussels today with relations between the UK and EU at a new low after the European Council President Donald Tusk said there was “a special place in hell” for people who promoted Brexit without any plan for delivering it.
The comment provoked outrage among Brexiteers, and will prove awkward for the Prime Minister as she herself goes into meetings with European leaders empty-handed despite just 50 days remaining until the UK leaves the EU.
Talks between opposing factions of the Conservative Party are not expected to have produced a single offer on how the controversial Irish border backstop can be replaced, leaving Mrs May to present a series of different options in Brussels despite
Paris Gourtsoyannis
demands from the EU for clarity.
Mr Tusk said the EU was not making “any new offer” and was hoping to hear from Mrs May “a realistic suggestion on how to end the impasse in which the process of the orderly withdrawal of the UK from the EU has found itself following the latest votes in the House of Commons”.
He concluded: “I have been wondering what that special place in hell looks like for those who promoted Brexit without even a sketch of a plan to carry it out safely.”
The European Council president was speaking alongside Irish Taoiseach Leo Varadkar following talks in Brussels in which they discussed preparations for what Mr Tusk described as the “fiasco” of a no-deal
Brexit on 29 March.
At the end of their press conference, microphones picked up Mr Varadkar telling the EU Council President: “They’ll give you terrible trouble in the British press for this,” as both men laughed.
Common Leader Andrea Leadsom led calls for an apology from Mr Tusk, calling his comments “disgraceful” and “spiteful”.
Asked whether the comments would contribute towards a positive atmosphere for the Prime Minister’s visit to Brussels today, Mrs May’s official spokesman said: “I think it is a question for Donald Tusk as to whether he considers the use of that kind of language to be helpful.”
Meanwhile, the government denied claims by
Labour that ministers were preparing to cancel a vote scheduled for Valentine’s Day, where MPS could get another chance to push forward their own alternative plans for Brexit.
Jacob Rees-mogg, the chairman of the pro-brexit European Research Group and a key figure in the so-called ‘Malthouse compromise’ bid by Tory MPS, said the EU could be offered extra money in exchange for releasing the UK from the CFP if the transition is extended.
David Duguid, the Conservative MP for Banff and Buchan who has proposed an amendment to the Fisheries Bill that would require the UK to leave the CFP by the end of 2020, was to meet the Malthouse group yesterday.